Prosecutors argue Independent's board had limited knowledge of reinsurance contracts before publishing annual report
Independent Insurance’s former executive chairman, Garth Ramsay, took to the witness stand at Southwark Crown Court today.
Prosecutor Andrew Baillie QC questioned the witness on key events, which occurred at the beginning of 2001, including the conclusion of reinsurance contract negotiations and a March 5 board meeting on the day that the company’s annual report was finalised.
Baillie began by asking the witness: “Were you aware at some point in January 2001 that it was proposed the Independent Group would enter into further reinsurance contracts to deal with the [reserving] situation?”
“Certainly by the end of February I was,” replied Ramsay.
Baillie added: “Were you aware at that [March 5, 2001] meeting of any other reinsurance agreements proposed?”
“No,” replied the witness.
Baillie moved on to ask about a quota share reinsurance contract, which the board received details about in May 2001, guaranteeing a minimum ceded premium of £1.6bn over four years—referred to as contract E. This contract, signed by Bright on March 5, superseded an earlier arrangement that stipulated a maximum £200m premium—referred to as contract D.
Baillie asked: “Would you have regarded a contract on these terms [E] as important on March 5, 2001?”
Ramsay said: “It would certainly be relevant, yes. The board would want to ask why contract D had been replaced by E on March 5, at the very least. Also there would be questions about the amount of premiums ceded—this would be a cause for concern.”
After lunch, defence counsel had the opportunity to cross examine Ramsay.
The principal defence counsel, Michael Bright’s barrister Ian Winter QC, asked Ramsay about the role of an executive chairman in a company the size of Independent.
Ramsay said he generally operated at a global level in a non-technical role.
Winter asked: “If you appointed an expert you would be inclined to run with what they said?” Ramsay confirmed the proposition.
Winter went on to say: “The week of March 5, 2001 was an extremely busy week for the CEO?”
“It was a reasonable busy week following the annual report announcement,” replied Ramsay.
Next to probe the witness was Philip Condon’s counsel, Gareth Rees QC. He contended that Condon’s expertise lay in underwriting, sales and the international side of Independent’s business.
“What he had almost no involvement with was the financial side of the business,” said Rees.
Ramsay replied: “If you mean the accounting side, yes.”
Michael Bright, Philip Condon and Dennis Lomas deny charges of conspiracy to defraud. The case continues.